Tough Times May Also Bring Opportunities
Faced with the double whammy of a slowing economy and skyrocketing fuel prices, the airline industry is in turmoil. Five U.S. airlines (Aloha, ATA, Eos, MAXjet, and Skybus) have gone belly-up. Delta and Northwest are merging, and United is desperately trying to find a suitable partner.
How will all this affect you? Airlines have been instituting one fare hike after another, and the mergers will make it easier to continue doing so. Mergers not only allow airlines to cut costs, but also to increase their "pricing power"—less competition means they can demand higher fares. They're also looking for new revenue sources by applying fuel charges, bringing back the Saturday-night-stay requirement, and tacking on fees (for checking two bags, changing an itinerary, getting a window seat, and more). On some American Airlines flights, flight attendants are even hawking books and electronics.
But while the airline industry can streamline relatively quickly—both through mergers and by cutting routes and grounding planes—the hotel industry can't. What's built is built (turning a hotel into a condo isn't a solution when mortgages are in short supply). To fill rooms that would otherwise go empty—and they will if air capacity continues to shrink—hotel companies are usually willing to discount.
Companies are likely to promote fire sales to people who are members of their loyalty programs, so sign up now—and subscribe to their e-mail newsletters, too. Moreover, it's a good time to get familiar with blind-search sites such as Hotwire and Priceline.Because when the going gets tough, the tough need to shop aggressively if they want a deal.